Map Monday: Designated Opportunity Zones of the Twin Cities

This past weekend Star Tribune metro reporter Eric Roper wrote about the census tract that includes the Mall of America and Bloomington’s South Loop being classified as Opportunity Zones. He notes that in the 2017 tax code overhaul, Congress created Opportunity Zones to offer tax advantages for investments made in designated distressed areas.

The designations stay in place until December 31, 2028, according to this LISC FAQ. This is in addition to existing tax credits such as the Low-Income Housing Tax Credit and the New Markets Tax Credit, but LISC thinks the U.S. Treasury Department could change its guidelines about the compatibility between those tax credits and Opportunity Zone tax advantages.

Side note: Distressed communities made it into a Map Monday back in 2016 when the Economic Innovation Group published the Distressed Communities Index.

The state of Minnesota’s submitted list of distressed areas selected census tracts from all around the state. Minnesota’s Department of Employment and Economic Development (DEED) has a website that lists all census districts and includes an interactive map (which are enough to make me lose a hour or two). Here’s my screenshot of every census tract in the Twin Cities.

Twin Cities Opportunity Zones

Designated census tract Opportunity Zones of the Twin Cities.

Technically, if we are expanding the Twin Cities beyond the standard Met Council seven counties to include the wider economic region, then River Falls, Wisconsin, has one Opportunity Zone, as do Red Wing, Cambridge and North Branch, Minnesota.

Seeing this map of designated “distressed” census districts brought to mind one of my recent Hennepin Minus Minneapolis posts. Three Rivers produced a map of Hennepin County (excluding Minneapolis) by income under $50,000 per acre. I immediately opened both maps side by side to compare how well the Hennepin suburban tracts fit. Compare for yourself!

As I compare the two maps, I think designating the Mall of America/South Loop is questionable compared with some nearby census districts in Richfield that weren’t selected. I wonder which criteria were balanced here. The other suburban Hennepin County tracts — especially the Crystal, Robbinsdale, Brooklyn Center and Brooklyn Park tracts — make a lot of sense.

I live in Hopkins. In fact, in checking this map I learned I live in an Opportunity Zone (27053023400 in the lower left of the map). Huh! I have many thoughts and questions about my Opportunity Zone and can’t resist jumping into the weeds:

  • The poverty rate of my Opportunity Zone is 23.6 percent, but which sites within it did Hennepin County have in mind? Why didn’t the county select the census tract that includes the significantly larger population of low-income residents in the northeast corner of Hopkins?
  • This is the only Opportunity Zone along the entire Southwest Light-Rail Transit (SWLRT) extension (two Near North census tracts are very close). It’s an Opportunity Zone that has one of the few naturally occurring affordable housing apartment blocks, Westside Village.
  • Does the combination of the Blake Road SWLRT station across the street plus the Opportunity Zone designation paint a bigger redevelopment bull’s eye on Westside Village? A better outcome would be if it gives some energy to the city’s East End plan, which happens to be almost entirely within the Opportunity Zone.
  • Also in this zone is the large SuperValu distribution center and a triangle of underused industrial land that Luther Auto bought so drivers on Highway 169 could have unobstructed views of their Honda dealership.

Eric Roper notes in his story that the Brookings Institution rated Minnesota among the top states for selecting distressed areas (link is a .pdf). Congress’ program has been criticized as sometimes being used for redevelopment. From a broad overview, the Twin Cities selections are mostly a good fit, though I wish planners had used a more precise unit than census tracts.

Interested in exploring an interactive map of all the Opportunity Zones around the country? I found this map.

I’m intimately familiar with the Hopkins and Saint Louis Park context, but I’d like to hear from those of you who know more about other designated census tracts. I can imagine some of you have thoughts about South Wedge being an Opportunity Zone! What do you think?

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13 Responses to Map Monday: Designated Opportunity Zones of the Twin Cities

  1. Alex Schieferdecker
    Alex Schieferdecker January 7, 2019 at 1:23 pm #

    The designated opportunity zones demonstrate the flaws in this part of the tax law. No doubt the originator of the idea envisioned areas like the selected tracts in North and South Minneapolis.

    Those might still see development, but any investor searching for locations specifically to take advantage of the tax break will likely be more tempted by the Mall of America, Midway St. Paul, and Hopkins SWLRT tracts, which qualify mainly because very few people actually live there, save for the existence of a limited amount of affordable housing.

    It’s not at all a bad thing if these tracts get developed, all are accessible and can support much greater intensity of uses. But it’s unlikely this is what the original proponents of the policy envisioned, and there’s maybe an opportunity cost here where investments are made in these areas that don’t *need* the help, and consequently not made in the areas that really do need a subsidy to make sense for developers.

    • Eric Anondson
      Eric Anondson January 7, 2019 at 1:26 pm #

      It seems like South Wedge didn’t need too much help either.

  2. Bill Lindeke
    Bill Lindeke January 7, 2019 at 2:33 pm #

    Glad to see the West Side flats on there.

  3. Mikey January 7, 2019 at 3:06 pm #

    Both my former neighborhood in South St Paul and my current surroundings in rural Cook Co are included. Maybe I’m a jinx?

  4. Curtis January 7, 2019 at 3:09 pm #

    The other flaw with the “opportunity zone” concept is it has no way to discern whether or not a development will actually help the local community. It seems to be based on the philosophy that “all development is good”, which is a flawed idea.

    Millions of dollars have been spent on the south loop development in Bloomington, yet the area still has no public gatherings spaces, grocery stores, schools, or public library. The only thing the area has gained is thousands of minimum wage jobs that won’t even pay the rent on a local apartment. Not all development is helpful development. If public subsidies are involved, it needs to be more selective about the types of projects that are funded.

    • Monte Castleman January 7, 2019 at 9:49 pm #

      Bloomington’s gained a substantial amount of property tax base. I gripe a lot about how my taxes keep going up due to increased value in my house (that I’ll never be able to actually use), but it would be even worse without how much non-residential tax base the city has.

      Schools: I don’t want my property taxes paying for a brand new school building when Bloomington has plenty of space for the students it has in existing buildings that have been maintained as needed.

      Libraries: There’s already two libraries in the city, if we build a third one it would be more towards the south and west sides perhaps at Valley West (there was a proposal to build one there a long time ago, but only Penn Lake and Oxboro got built out of three.

      Grocery Stores: I’m assuming a cute, hyper-expensive tiny store will eventually come as part of a mixed use development. But I’d imagine by and large the people that live in the new housing have cars and simply haul home a weeks worth of groceries from Cub, Target, Trader Joes, or Whole Paycheck, Walmart, or wherever. I’m don’t know how many would trudge home in the snow and cold on foot burdened with arms full of groceries even with that option. Presumably the people that live there move in knowing there aren’t neighborhood grocery stores and are fine with it. In my opinion what Bloomington needs is a HyVee, not another local hyper-expensive cute tiny store.

      I’m not sure what you mean by “public gathering place”. There’s the Wildlife Refuge and the Headquarters building, the Bloomington Central Station Park. Eventually paved trails will go from the Wildlife Refuge The Mall itself is private property but gathering there is tolerated as long as you’re not disrupting things by protesting- think the events they have in the rotunda or the temporary skating rink, or the proposed waterpark.

  5. Josh January 7, 2019 at 7:20 pm #

    Lake Street between Lyndale and Hennepin? Really?

    • Eric Anondson
      Eric Anondson January 7, 2019 at 7:45 pm #

      That census tracts goes from Hennepin to 1st Ave S, Lake St. to 28th St., reports to have a 29.3% poverty rate. It’s percent of the Benchmarked Median Family Income is 39.6%.

      It includes That Effing Kmart and the Karmel mall, fwiw! But also Elan and the Mozaic phases. Census tracts for this program are so clumsy.

      • Josh January 8, 2019 at 7:36 am #

        Is it weird that it makes me happy to know that so many impoverished families live in that area?

        Not that I’m happy that they live below the poverty line, but that affordable housing is available in an area that is safe with relatively good schools.

      • David Greene January 8, 2019 at 2:19 pm #

        Most of the redevelopment along the Greeway wasn’t there 8-10 years ago. It was mostly light industrial and “distressed” from a certain point of view. While I agree that the south Wedge portion didn’t need any incentives to develop, it’s not really fair to say that Elan and Mozaic were included in the tract. They didn’t exist at the time.

        • David Greene January 8, 2019 at 2:20 pm #

          And…I posted too soon. Looks like this was created in 2017, so gripe away!

        • Andrew Evans January 10, 2019 at 1:26 pm #

          David Greene,

          Thanks for reminding me how old I’m getting! It’s sometimes amazing to think how much has changed in the expanded UpTown area, and I’ve only been around here since the early to mid 2000’s.

          Although still a little more expensive, most of those areas were affordable around 2005 when I moved here after college. So if it’s updated with the Census I could see it being included on this map.

  6. Molly January 11, 2019 at 12:39 am #

    The OZ program is problematic for a number of reasons, and the lack of precision geography is just one of them. As a St Paul person, I feel like some of the choices are deeply odd. For example, the tract that is south of W7th including Irvine Park. It is an area where they are already putting in very expensive market-rate apartments, so I question the idea that there is a lack of investment in the area requiring special incentives to unlock private capital.

    The larger issue is that there are such slight parameters on the type of development that counts as OZ eligible and it is ultimately a giant tax benefit for wealthy folks trying to avoid paying taxes on gains. For the non-mission driven investor, this incentivizes them to choose the areas that have the greatest chance of yielding the highest returns that they can then avoid paying taxes on as long as they remain invested over a ten year period. This means that areas that are most likely to be at a tipping point are the ones most likely to attract investment and areas that likely have the most challenges attracting investment are the areas where the private OZ funds are least likely to invest. I am particularly skeptical that OZ will lead to significant investment in some of the most disinvested Greater Minnesota communities.

    The good news is that there are folks, LISC for example, working on mission-driven OZ funds so some good will come of it and maybe I am overall being way too cynical.

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